EU costs and benefits: an impossible balancing act

No-one knows. If anyone asks you about the economic costs and benefits of leaving the European Union, that is almost always going to be the best answer.

It is also the answer to most questions about the economic costs and benefits of staying in. These are not questions that economists or anyone else can give a sensible answer to - not least, because no-one can say with any confidence what the terms of Britain's NON-membership of the EU would be.

The deputy prime minister has suggested that three million jobs "rely directly on our participation" in the European single market. The source for this number is not entirely clear - though the number is similar to past estimates of the number of jobs that are directly or indirectly dependent on Britain's trade with the EU.

To state the obvious: those jobs would not necessarily disappear if the country left the EU. Norway, for example, has access to the single market without being formally part of the EU.

Jobs at risk?

Economists get a bit irritated when these debates are framed in terms of the "jobs at risk". What should matter, in the view of most economists, is what all this means for our rate of growth and our national income per head - in other words, what should matter is how our relationship with the EU is likely to affect our national prosperity. What a given level of income means for the quantity and quality of Britain's jobs depends not on the EU but on how our labour market works.

I suspect this is a lost cause for the economists. Most politicians will tend to talk about the economic impact in terms of jobs, and so will most voters. The point is that even if jobs were lost, we cannot assume that all those people would suddenly be out of work.

Lifting the burden

Lord Lawson and other supporters of British withdrawal would say that lifting the burden of European bureaucracy would create a lot more employment, and income - and open the eyes of British business to the many opportunities available outside Europe.

That is possible. It is also possible that being outside an increasingly integrated European Union would fundamentally undermine the City as a global financial centre and cause many global businesses to quit the UK. All of this is worth debating, and no doubt will be, here and elsewhere, in the years to come.

The relative economic costs and benefits of membership would be uncertain, even if we knew exactly what the terms of Britain's departure would be.

But when Britain's future - inside or outside the club - is so uncertain, it is difficult to even know where to start.